New loan scheme could transform Welsh farms and fight climate change

Hayley Jones

Welsh farming businesses will be able to access affordable finance to modernise operations and reduce carbon emissions under a new loan scheme announced by the Welsh Government.

The Sustainable Agriculture Loan Scheme (SALS), which will be delivered by the Development Bank of Wales, is expected to launch later this year.

The scheme will offer incentivised loans at a fixed three per cent interest rate, repayable over up to 15 years.

It is aimed at helping small and medium-sized farms invest in energy efficiency, waste management, and productivity improvements.

Up to £5 million will be available in the 2026/27 financial year, with the potential to extend the scheme depending on demand.

Farms will be able to borrow between £25,000 and £1 million per project. A six-month repayment holiday at the start of the loan will give businesses time to see the benefits of their investment before repayments begin.

Seasonal payment options are also being considered to support farms with variable income cycles.

Policy focus

The Welsh Government has said the scheme represents a clear policy choice to use public finance as a repayable, targeted tool to drive sustainable farming practices.

It is intended to complement existing grant support available to farmers under other Welsh Government schemes.

Deputy First Minister for Climate Change and Rural Affairs Huw Irranca-Davies said the scheme would provide additional support to farming businesses seeking to modernise.

He said: “I’m pleased that we’re able to work with the Development Bank of Wales on this new scheme which will be another way of supporting Welsh farming businesses to modernise and remain financially sustainable.”

Flexible funding

The Development Bank of Wales said it would provide funding packages that are patient and flexible, recognising the challenges faced by the sector.

Giles Thorley, chief executive of the bank, said: “Supporting farm businesses with patient and flexible funding packages is critical at a time of much transition in the sector.

We look forward to working closely with Welsh farmers to support new projects enabling them to both ‘invest to save’ and enhance their future sustainable farming delivery.”

Sustainable alignment

The scheme is designed to align with Wales’s Sustainable Land Management duties and will work in a complementary way with the rollout of the Sustainable Farming Scheme, which supports farmers to manage land sustainably and reduce environmental impact.

Officials said the pilot programme would initially run for 12 months, allowing the government and the bank to monitor uptake and the impact of the loans on farm productivity and sustainability.

Farmers interested in the scheme will be able to register their interest through the Development Bank of Wales. The bank has said it will provide further information, guidance, and support to help businesses make applications.

The launch of SALS comes as the Welsh Government continues to promote sustainable farming practices and support the rural economy.

By offering repayable finance at favourable terms, the scheme is designed to encourage investment in low-carbon technologies and operational improvements while helping farm businesses remain financially sustainable in a period of economic and environmental change.